It is important for businesses as it may enhance shareholder's wealth, manage risk, and optimize the allocation of resources by making strategic financial decisions.
With the use of financial management allocation of financial resources (capital) can be effectively done among various investment opportunities, projects, or assets.
Financial management effectively identifies, assess, analyse and manages various types of risks that a company may face, such as market risk, operational risk, and liquidity risk.
Businesses must maintain an adequate amount of liquidity to meet the short term obligations and smooth operations of a project.
Financial management plays an important role in strategic planning and decision making to allocate resources and measure performance of an organisation.
Effective financial management minimises costs and improves operational efficiency to increase profitability and competitiveness of a business.
Financial management ensures compliance with financial regulations, accounting standards etc to enhance trust, credibility, and sustainability within a business.
Financial management plays a important role in managing investor relations and communicate financial performance to shareholders, and other stakeholders.